Half year report 2012 of the Galenica Group

Transcription

1 Half year report 2012 of the Galenica Group the galenica group excellence in the healthcare market

2 share Price Share price performance _change in percentages at the end of the quarter in % 1,600 1,400 1,200 1, Sept. 95 Dec. 96 Dec. 97 Dec. 98 Dec. 99 Dec. 00 Dec. 01 Dec. 02 Dec. 03 Dec. 04 Dec. 05 Dec. 06 Dec. 07 Dec. 08 Dec. 09 Dec. 10 Dec. 11 June 12 Cumulative growth: 1,465% Average growth rate p.a.: 20% Total shareholder return p.a.: 22% Galenica Swiss Performance Index (SPI) Key figures (Unaudited figures) in million CHF Galenica Group Net sales _Pharma _Logistics _Retail _HealthCare Information _Net sales with other segments 1, , (333.5) 1, , (317.7) EBITDA EBITDA in % of net sales 13.4% 13.2% Earnings before interest and taxes (EBIT) _Pharma _Logistics _Retail _HealthCare Information _Other and Eliminations EBIT in % of net sales 11.1 % 10.9% Net profit Attributable to: _Shareholders of Galenica Ltd. _Non-controlling interests (3.0) (4.4) Investment in tangible and intangible assets Employees at balance sheet date (FTE) 6,013 5,615 Cash flow from operating activities Cash at balance sheet date Balance sheet total 3, ,114.2 Shareholders equity 1, ,202.6 Equity ratio 39.4% 38.6% Net borrowings Gearing 62.3% 58.9% 2_ Key figures Galenica half year report 2012

3 FOREWORD Dear Shareholders, Ladies and Gentlemen, _In the first six months of 2012, sales of Ferinject outside Switzerland rose sharply by over 56%. Within Switzerland, sales also increased considerably by more than 12%, despite Switzerland being a mature market in which sales were about CHF 33 million in the last twelve months. This is equivalent to almost CHF 5 million in sales per every 1 million inhabitants. An impressive success! Our strategy is bearing fruit not only in Switzerland but increasingly in other countries as well. Exploiting potential to the full calls for time and patience in investing in research, development and promotional activities that will increase awareness and knowledge of iron deficiency, and includes reinforcing our own sales affiliates. Eight strategic key projects contribute to Galenica s sustainable development _Broader marketing of Ferinject in indications outside dialysis is one of eight strategic projects we will be focusing on over the next five years. Going forward, this will make a major contribution to Galenica s sustainable, successful development. Significant expansion will be achieved through the registration of Injectafer (the brand name of Ferinject in the USA) by the US Food and Drug Administration (FDA). Our US partner Luitpold Pharmaceuticals, Inc. has submitted a comprehensive package of study data. Registration of Injectafer in the USA: no additional clinical data requested _At the end of July 2012, the FDA noted its decision to withhold approval for Injectafer due to deficiencies in Luitpold s manufacturing facility in Shirley, New York, until these deficiencies are satisfactory resolved. Luitpold Pharmaceuticals is working closely with the FDA to resolve these deficiencies. No additional clinical data or further analysis were requested for the current application. _The collaboration with our partner Fresenius Medical Care is producing excellent results. Venofer continues to be the leader in the dialysis market despite the presence of competing products and its substitution with Ferinject outside dialysis. great dedication. The results were published in early July The study achieved both its primary and secondary endpoints and will now be used as the basis for registration filings. _A further project in the Pharma business sector concerns the ongoing strengthening of our network of sales affiliates which involves exploiting synergies and actively sharing experience. For example, the Iron Academy doctors conference, staged annually since 2008 with great success in Switzerland, was held in France under the name Universités du fer and was also very well attended. Swiss HealthCare Services: focus on improvements in efficency _Our Logistics, Retail and HealthCare Information business sectors are holding their ground in a persistently difficult Swiss market that is affected not only by domestic factors such as measures to reduce healthcare prices but also by foreign issues such as the euro exchange rate that continues to drive consumer tourism outside Switzerland. The priority in Logistics is to maintain the ongoing improvement and expansion of our services. In Retail, we are focusing on further optimising our processes and back-office functions to bring about continuous improvements in efficiency and performance. Expected profit 2012: above prior-year level _The economic situation is, and remains, challenging: health authorities worldwide are increasing pressure on drug prices, and the negative impact of exchange rates shows no signs of abating at CHF 1.20 the euro is still far below its previous level. Against this backdrop, the Galenica Group achieved good results in the first half of the year. Since launching the strategy that it continues to follow today in 1995, Galenica has consistently grown its earnings. We anticipate that we will maintain this current level of performance and will generate a net profit above the prior-year level, both before and after minority interests. Berne, 14 August 2012 _In addition, our common company Vifor Fresenius Medical Care Renal Pharma pushed ahead with the phase III studies for the phosphate binder PA21 quickly and with Etienne Jornod Executive Chairman David Ebsworth ceo Galenica half year report 2012 Foreword _3

4 reporting Galenica GROUP Sales and operating result _Galenica is well on track to achieve its ambitious objectives despite the macroeconomic environment, which continues to be difficult. Exchange rates once again affected Group sales. Pressure on healthcare costs was the dominant topic in both the European and Swiss markets. _The Galenica Group increased its net sales by 2.2% to CHF 1,615.8 million compared with the same period in Earnings before interest, taxes, depreciation and amortisation (EBITDA) were CHF million (+4.2%). The operating result (EBIT) increased by 4.1% to CHF million. Consolidated net profit before minority interests (non-controlling interests) rose to CHF million (+6.8%). After deducting minority interests, consolidated profit increased by 12.8%. This year, too, Galenica is investing significant funds in research and development. In the first half of 2012 alone, Galenica invested CHF 70.5 million (compared with CHF 60.1 million in the same period last year), including for the development of the novel phosphate binder PA21. Investments in tangible and intangible assets totalled CHF 24.0 million. Milestones in the first half of 2012 _Ferinject, which is now marketed in 33 countries, once again achieved very good results. Global sales of Ferinject increased by 39.4% (+44.5% in local currencies), and the number of units sold was up over 50%. _The results of the PREFER study showed that intravenous iron replacement treatment with Ferinject rapidly improves fatigue in symptomatic iron-deficient, non-anaemic women. _Good progress was made with the development of the novel phosphate binder PA21, with patients recruited more quickly than expected for the phase III studies. The top-line results were published in early July The study met its primary and secondary endpoints and demonstrated that PA21 successfully controls hyperphosphatemia in dialysis patients with chronic kidney disease. The data will serve as a basis for registration filings in the USA, Europe and Switzerland. _The Retail strategy is paying off. Despite a market environment that remains difficult, the business sector secured satisfactory growth with stable profitability and continued the expansion of its pharmacy network. _Documed won a WTO (World Trade Organization) tender from Swissmedic to develop a new system for regulatory drug information (Arzneimittel-Informations-Publikationssystem, AIPS). Outlook for 2012 _At the end of July 2012, the US health authority Food and Drug Administration (FDA) advised Galenica s US partner Luitpold Pharmaceuticals that approval of the application for Injectafer (US brand name for Ferinject ) would be withheld due to deficiencies in Luitpold s manufacturing facility in Shirley, New York. The FDA requires satisfactory resolution of these deficiencies before the application for Injectafer can be approved. Luitpold Pharmaceuticals is working closely with the FDA to resolve these deficiencies. The authority did not request any additional clinical data or further analysis for the current application. _Vifor Pharma will continue to extend the geographical reach of Ferinject and raise awareness of iron deficiency in a variety of clinical conditions. Net sales by business sector as of 30 June 2012 Number of employees as of 30 June 2012 Pharma CHF million Logistics CHF 1,038.3 million Retail CHF million HealthCare Information CHF 24.5 million (Galenica Group CHF 1,615.8 million) Galenica Ltd. 42 Pharma 1,846 Logistics 1,039 Retail 4,004 HealthCare Information 209 (Galenica Group 7,140) 4_ Reporting Galenica half year report 2012

5 _First submission of registration filing for PA21 is planned for the fourth quarter of _Within the Health Division, Logistics and Retail will improve efficiency by focusing on processes and performance and will strengthen customer services. _The management is convinced that Galenica will achieve a level of consolidated net profit in 2012 above that of the previous year. PHARMA Strategy update and financials: broadening the Ferinject franchise _Vifor Pharma had a solid start to the year Strate - gic priorities included advancing the development of Ferinject in international markets and finalising the PA21 clinical studies. _The company made progress in both areas. Over the first six months of 2012, sales of Ferinject grew by about 40% in CHF and by around 45% in local currencies. This is a remarkable success, and proof that the international activities aimed at raising awareness of iron deficiency outside of dialysis are paying off. A highlight in terms of broadening the strong franchise of Ferinject in all the relevant therapeutic areas was the recommendation of the European Society of Cardiology (ESC) to routinely test heart failure patients for iron deficiency and to consider the use of ferric carboxymaltose, the active ingredient of Ferinject, for the treatment of iron deficiency. The next step is to promote the society s guidelines with cardiologists to encourage them to adopt the treatment behaviour. _Providing clinical evidence for the benefits of iron injections is pivotal. The top-line results of the PREFER study, reported for the first time in April 2012 at a symposium of the German Society of Internal Medicine (DGIM) Congress in Wiesbaden, Germany, demonstrated that intravenous iron treatment with Ferinject rapidly improves fatigue in symptomatic iron deficient, non-anaemic women. _Vifor Fresenius Medical Care Renal Pharma provided excellent support for the phase III clinical trials of the novel phosphate binder PA21. In early July the results of the pivotal phase III clinical study were published. They show that PA21 successfully controls hyperphosphatemia in patients with chronic kidney disease on dialysis. The study met its primary and secondary endpoints, and will be used as the basis for regulatory filings in the USA, Europe and Switzerland. _In late 2011 Galenica fully acquired Vifor Uriach Pharma, a joint venture with its Spanish partner Grupo Uriach, as well as Grupo Uriach s Primary Care Business with sales of approximately CHF 13 million during the first half year The company was renamed Vifor Pharma España and fully integrated in the first six months of The integration improves Vifor Pharma s ability to commercialise Ferinject and Venofer as well as several in-licensed products. _In the first half of 2012 the Pharma business sector generated net sales of CHF million, an increase of 2.4%. Currency effects and tight healthcare budgets again dampened growth. Adjusted for negative currency effects, the increase was 3.9%. Income from licensing fees for CellCept amounted to CHF 44.0 million. Consolidated earnings before interest and taxes (EBIT), typically forward loaded in the Pharma business sector, increased by 0.7% to CHF million. Earnings by business sector in million CHF Net sales Total revenue EBITDA EBIT Pharma ROS 1) 34.5% 37.6% 30.8% 33.7% Logistics 1, , , , ROS 2.0% 1.7% 1.3% 1.0% Retail ROS 6.2% 6.2% 4.5% 4.5% HealthCare Information ROS 22.3% 19.6% 10.0% 9.6% 1) in % of total revenue Galenica half year report 2012 Reporting _5

6 Outlook 2012: preparation for regulatory filing of PA21 _The priority in R&D, taken on by Vifor Fresenius Medical Care Renal Pharma, is to finalise the preparations for the filing of its novel phosphate binder PA21 in the USA, Europe and Switzerland. First submission is planned for the fourth quarter of _The foundation stone for expanding the use of Ferinject for the treatment of iron deficiency has been laid. Vifor Pharma is extending promotion into new therapeutic conditions, for example, in gastroenterology in the UK market preparation and education for the treatment of patients with heart failure is under way in all countries. _Geographic expansion will continue in countries where Vifor Pharma is still operating without a partner or where Ferinject has not yet been launched. Vifor Pharma Rx _The intravenous iron drug Ferinject showed another period of strong growth. International sales increased by 39.4% (+44.5% in local currency) to CHF 55.9 million. The total number of units (100 mg) of Ferinject sold increased by over 50%, particularly in France (+287%), the Netherlands (+89%), Austria (+78%), the UK (+74%) and Portugal (+61%). In Switzerland, net sales increased by 12.6%, showing strong momentum, too. Use in other indications in the domestic market is successful. _Some of the growth of Ferinject is due to substitution effects related to Venofer. In the first half-year 2012, Venofer sales were CHF 71.8 million ( 16.0%; 16.1% in local currency). Sales were also impacted by price pressure in several markets as a result of government intervention and further ISS (Iron Sucrose Similars) launches. _Sales of other iron products accounted for CHF 30.0 million ( 20.1%; 19.5% in local currency). Global sales of Maltofer accounted for CHF 23.8 million ( 22.5%; 21.8% in local currency) due to destocking by partners owing to changes in packaging, as well as the timing of tenders. Taking these factors into account, sales of Maltofer remained stable in the first half Realising the market potential of Ferinject in all relevant therapeutic areas _At the end of June 2012, Ferinject was registered in 40 countries worldwide and had been launched in 33 markets. In the second quarter of 2012, Ferinject received reimbursement in Belgium and the full launch took place. Further launches are planned later in the year and at the beginning of _Realising the market potential of injectable iron in therapeutic areas beyond the dialysis market is one of the Group s strategic priorities. In the first six months of 2012, an important step was made in cardiology. The new Guidelines of the European Society of Cardiology on acute and chronic heart failure confirm that iron therapy with ferric carboxymaltose, the active ingredient of Ferinject, improved self-reported patient global assessment in patients with chronic heart failure associated with iron deficiency and may be considered as a treatment for such patients. _In the first six months of 2012, further proof of the effectiveness of Ferinject was provided. The results of the PREFER study show that a single 1,000 mg dose of intravenous iron such as Ferinject rapidly improves fatigue in symptomatic iron deficient, non-anaemic women. The results of the study, the first clinical trial to evaluate the efficacy and safety of Ferinject in iron deficient, non-anaemic women of child-bearing age suffering from unexplained fatigue, were reported in April 2012 at a symposium of the German Society of Internal Medicine (DGIM) Congress in Wiesbaden. The data of the PREFER study will be presented at more congresses in the second half of Total net sales Rx products in million CHF Change in % Intravenous (iv) iron replacement products: Venofer Ferinject Oral iron replacement products: 30.0 thereof Maltofer Other Rx products: Revenues and licence fee income: CellCept, other _ Reporting Galenica half year report 2012

7 _As for the results of the other ongoing clinical trial programmes, the FIND-CKD study completed patient recruitment. It examines the benefits of Ferinject over oral iron replacement products for the treatment of anaemia in patients with chronic kidney disease. Results are expected to be published in Recruitment is ongoing and on track for four other studies, including two studies in cardiology which further assess the benefits of Ferinject in patients with heart failure. _Health authorities again examined Vifor Pharma sites as part of customary audits. Inspections for Good Clinical Practice in the UK and of the organisation responsible for the European registrations in France were successfully completed. Maximising the value of Venofer _Volumes of Venofer are driven by the collaboration with Fresenius Medical Care. _In the short time that the collaboration between Vifor Pharma and Vifor Fresenius Medical Care Renal Pharma has been established, great progress has been made. One of the principal drivers of progress is the joint intravenous iron brand team. This medical marketing team aligns strategy, brand messages and operations for Venofer and Ferinject in nephrology to ensure the success of the brands. _In May 2012, Venofer was presented at the European Dialysis and Transplant Association (EDTA) congress in Paris to further strengthen its leading position in haemodialysis. Strong partnerships _Vifor Pharma strongly believes partnerships facilitate and expedite access to markets. While good progress was observed in all partnerships, the collaboration with Fresenius Medical Care merits highlighting. Besides strengthening its activities in Europe and the USA, the common company Vifor Fresenius Medical Care Renal Pharma has been broadening its footprint through partnerships in several countries in Asia and Latin America and serves some 250,000 dialysis patients worldwide. _Furthermore, the company continued with preparations for the filings of the novel phosphate binder PA21 in the USA, Europe and Switzerland. First submission is planned for fourth quarter of _Japanese partner Kissei Pharmaceutical has progressed with the clinical development of PA21 for Japanese patients, with the phase II dose ranging study well on its way. Infectious Diseases/OTX _The Infectious Diseases/OTX franchise saw net sales of its immuno-stimulant products affected by destocking effects. Due to a weak flu season, many partners had to use up their winter stocks before placing new orders. This impacted on global net sales of Broncho-Vaxom, which amounted to CHF 17.1 million ( 30.0%; 28.7% in local currency). Sales of Uro-Vaxom werer CHF 7.7 million (+16.7%; +19.7% in local currency). Development in Russia was positive, where a new partner generated increasing revenues for Broncho-Vaxom. The product performed also well in Switzerland, where a new campaign was launched. Doxium likewise showed pleasing continued progress. _The priority in marketing and promotional activities was the re-launch campaign for Broncho-Vaxom. In the global roll-out process, preparations were finalised in Europe and started in Asia, then to be followed by Latin America. Moreover, Uro-Vaxom has been included in the treatment guidelines in Brazil and Russia. Work is also being done to further expand the paediatrics business by developing new galenic formulations for Brocho-Vaxom. The strongest Infectious Diseases/OTX products in terms of net sales in million CHF Change in % Broncho-Vaxom Doxium Dicynone Uro-Vaxom Galenica half year report 2012 Reporting _7

8 Vifor Pharma Consumer Healthcare Switzerland with new product launches _In the first six months of 2012, sales of Vifor Pharma Consumer Healthcare were CHF 38.5 million ( 2.7%). The Swiss OTC market declined 2%. Vifor Pharma OTC products underperformed the market due to optimisation of the product range. _The main products, in particular Algifor, performed well. For Perskindol a new crackling spray was launched. It first cools and then warms the skin and addresses both amateur and professional athletes. In addition, two new products were launched within the Magnesium brand. The new Magnesium Vital One contains a triple combination of organic magnesium salts that are easily absorbed and utilised by the body in a once per day dosage. Magnesium Vital Sport is a multivitamin and mineral product specifically developed for athletes requirements. The market received both launches very well. Sales of Anti- Brumm were negatively impacted by the bad summer weather. _Given challenging markets, the business unit s strategic priorities are under review, with the roll-out being planned for _Toll manufacturing. Third-party manufacturing continued to grow versus last year (+7.8%). International success of Perskindol _Exports of Vifor Pharma Consumer Healthcare products were CHF 14.0 million in the period under review, and thus represented an increase in sales of 8.2% (+11.4% in local currency). _In international markets, Vifor Pharma Consumer Healthcare has reinforced its strong position in Poland. For Australia, a new partner was selected. Evaluations of new partners in Russia and Mexico are under way. The best performing product was Perskindol, which showed double-digit revenue growth in international markets in the first six months of The strongest Consumer Healthcare products (OTC) in terms of net sales (Switzerland and exports) LOGISTICS Sales and operating result _In the Logistics business sector, sales remained at the same level as in the first half of 2011, at CHF 1,038.3 million (+0.5%) and operating income (EBIT) rose by 26.3% to CHF 12.9 million, thanks to a further incease in efficiency. While the healthcare market is benefitting from demographic trends, particularly population growth and an ageing society, these continue to be countered by growth-inhibiting factors. Expiring patents on key products had an impact on volumes in the first half of Galexis: more efficient and more flexible _Good logistics call for constant optimisation, right down to the smallest detail. Galexis established new rapid setup stations in the first six months of 2012, which enable large quantities of items such as samples or printed matter to be handled quickly. The new Kolor system is also increasing flexibility. The name is an acronym for Kontingentierung und logische Reservation (allocation and logical reservation). Kolor enables Galexis to offer the market new logistics functions, such as forward ordering, and roll-out is due to be completed by the end of the year. Galexis has also made its transport logistics more efficient and enhanced vehicle utilisation. _Galexis parallel import of the Rescue range of Bach Flower remedies gives its customers a competitive alternative to the offerings of other major distributors. Unione Farmaceutica Distribuzione: proven quality _The leading pharmaceutical wholesaler in Ticino was able to maintain its position in the first half of Alloga: innovative coolbox _Optimising processes is also a key focus at Alloga. The prewholesale business consolidated its warehouses, optimised its set-up process and established an integration process in the period under review, improving its interface coverage with pharma customers. In doing so, Alloga benefits from the continuing trend in the pharma and healthcare industry to outsource logistics and goods storage. in million CHF Change in % Perskindol Equazen eyeq Algifor Anti-Brumm Triofan _ Reporting Galenica half year report 2012

9 _The Alloga SC coolbox, developed in-house, was introduced in the first half of 2012 by the majority of our partners who offer products chilled to between 2 8 C. Some 2,000 coolboxes are now in use. Unique in Switzerland, the box is easy to use as it retains the same temperatures throughout the year, even under widely differing climatic conditions. The Galenica Group is therefore perfectly equipped for the forthcoming tightening of European regulations on pharmaceutical distribution logistics known as Good Distribution Practice (GDP). G-Pharma: more own brands _The service provider for trade brands and commercial products is gradually expanding its selection of ownbrand products, which now comprises some 40 products. RETAIL Sales and operating result _Sales of the Retail business sector increased by 7.1% year-on-year to CHF million in the first half of This growth is remarkable given the general decline in retail sales, increased dispensing of drugs by doctors, price cuts, patent expiries and weather-related effects. The further expansion of pharmacy formats was a significant factor contributing to volume increases. In the first six months of 2012, a total of ten wholly owned points of sale and six run by independent partners were added. Thanks to the strong increase in sales of more expensive prescription medications, strong organic sales growth of 3.2% was registered despite the adverse operating environment. Earnings before interest and taxes (EBIT) improved by 8.7% year-on-year to CHF 26.3 million. _Optimising business processes is a strategic priority in the Retail business sector, among other things, allowing it to gain more leeway with regard to price reduction measures. One such example is the Lore (Logistics & Retail) project which aims to install more efficient processes for areas such as order and goods handling. Following analysis, the pilot phase of the project was launched successfully in the first half of Amavita: harmonising the core range _Having tested its core range in small pilot pharmacies last year, Amavita introduced it into other pharmacies, including those run by independent partners. It also entered into an innovative collaboration with Pro Juventute, with Amavita handling all health and beauty questions for the newly founded parents club which offers pregnant women, parents and grandparents advice, services and price advantages. Sun Store: important anniversary _The oldest pharmacy chain in Switzerland is celebrating its 40 th anniversary in Customers benefit from a wide range of special offers such as the weekly Sunny Monday special offer. The fully renovated offices at the headquarters in Saint-Sulpice could also be occupied again. GaleniCare pharmacies and shareholdings Change Amavita pharmacies 1) Sun Store pharmacies 1) Coop Vitality pharmacies 2) MediService specialty pharmacy 1) 1 1 Majority holdings in other pharmacies 1) Minority holdings in other pharmacies 2) 2 2 Total own points of sale ) Fully consolidated 2) Consolidated at equity Independent partners of GaleniCare Change Amavita partnerships Winconcept partner pharmacies Total independent partners Galenica half year report 2012 Reporting _9

10 Coop Vitality: new hair mineral analysis _Services from pharmacies generate added value. The new hair mineral analysis at Coop Vitality pharmacies is receiving a positive response. It identifies any mineral deficiencies or excessive levels of heavy metals. Based on the analysis, the specially trained staff give individual recommendations on diet and the possible need for nutritional supplements. MediService: increasing specialised services at Pharma Care _Cost pressures in the healthcare sector and increasing numbers of high-priced medications demand new, specialist services. In this environment, MediService is growing significantly faster than the market. MediService supports pharma companies in a range of therapeutic areas with the launch of new products, as well as offering intensive patient support and specific services. Winconcept: denser branch network _The grouping of independent pharmacies continues to increase. In the period under review, six new pharmacies were added. HEALTHCARE INFORMATION Sales and operating result _The Federal Administrative Court s decision to shelve the compulsory documentation requirement at Documed resulted, as expected, in a decline in sales for the Health- Care Information (HCI) business sector. Sales declined by 1.9% in the first half of 2012 to CHF 24.5 million. Earnings before interest and taxes (EBIT) amounted to CHF 2.4 million, an increase of 4.1%. e-mediat and Documed _Documed won the European WTO (World Trade Organization) tender from Swissmedic and has consequently been awarded the contract to develop a new system for regulatory drug information (Arzneimittel-Informations- Publikationssystem, AIPS). _The leading provider of master data systems for the Swiss healthcare market is currently in a transitional phase with regards to the regulatory documentation requirements for marketing authorisation holders. Documed supports all market players in ensuring that pharmaceutical information essential for dispensing drugs continues to be accessible in a comprehensive form, at all times and from any location. _In addition, Documed has optimised mobile device access to the compendium.ch website. TriaPharm and TriaMed _HCI Solutions has launched a new, more user-friendly generation of TriaPharm software at Amavita pharmacies cashdesks. TriaPharm is the total management software solution for pharmacies and the new version will also be introduced in Sun Store pharmacies in the second half of the year. _Sales activities were stepped up for TriaMed. Doctors networks, medical centres and HMOs (health maintenance organisations, health centres) are increasingly using the product. 10_ Reporting Galenica half year report 2012

11 consolidated Interim financial statements 2012 Galenica half year report 2012 Consolidated interim financial statements 2012 _11

12 Consolidated income statement in thousand CHF Revenue Net sales 1,615,801 1,581,170 Other revenue 173, ,343 Total revenue 1,789,755 1,724,513 Operating costs Cost of goods sold (1,063,706) (1,044,775) Personnel costs (290,334) (278,084) Other operating costs (218,703) (193,397) Depreciation and amortisation (37,122) (35,513) Total operating costs (1,609,865) (1,551,769) Earnings before interest and taxes (EBIT) 179, ,744 Financial income 2,575 7,049 Financial expenses (25,091) (34,510) Income from associates 1,036 1,269 Earnings before taxes (EBT) 158, ,552 Income tax (27,463) (23,959) Net profit 130, ,593 Attributable to: _Shareholders of Galenica Ltd. _Non-controlling interests 119,616 11, ,998 16,595 in CHF Earnings per share Diluted earnings per share Unaudited figures 12_ Consolidated income statement Galenica half year report 2012

13 Consolidated statement of comprehensive income in thousand CHF Net profit 130, ,593 Other comprehensive income Hedge transactions _change in fair value _realised in the consolidated income statement 8,536 2,957 Available-for-sale financial assets _change in fair value _realised in the consolidated income statement , Translation differences 4,543 (3,872) Income tax Other comprehensive income 13,775 1,836 Comprehensive income 144, ,429 Attributable to: _Shareholders of Galenica Ltd. _Non-controlling interests 133,391 11, ,809 16,620 Unaudited figures Galenica half year report 2012 Consolidated statement of comprehensive income _13

14 Consolidated statement of financial position Assets in thousand CHF Current assets Cash 315, ,687 Securities 6,717 6,604 Receivables 589, ,647 Tax receivables 3,939 4,236 Inventories 338, ,592 Prepaid expenses and accrued income 55,405 31,411 Total current assets 41% 1,309,400 41% 1,262,177 Non-current assets Property, plant and equipment 441, ,536 Investment properties 53,710 53,862 Intangible assets 1,259,842 1,252,338 Investments in associates 20,310 24,768 Financial assets 49,735 51,946 Deferred tax assets 8,080 6,375 Employee benefit assets 14,066 15,155 Total non-current assets 59% 1,847,601 59% 1,851,980 Total assets 100% 3,157, % 3,114,157 Liabilities and shareholders equity in thousand CHF Current liabilities Financial liabilities 214, ,603 Other liabilities 415, ,049 Tax payable 36,849 33,289 Accrued expenses and prepaid income 120, ,534 Provisions 34,901 34,783 Total current liabilities 26% 821,685 26% 828,258 Non-current liabilities Financial liabilities 1,001, ,614 Deferred tax liabilities 71,819 68,008 Employee benefit liabilities 17,412 17,412 Provisions 2, Total non-current liabilities 35% 1,092,872 35% 1,083,300 Shareholders equity Share capital Retained earnings 1,219,374 1,156,258 Equity attributable to shareholders of Galenica Ltd. 1,220,024 1,156,908 Non-controlling interests 22,420 45,691 Total shareholders equity 39% 1,242,444 39% 1,202,599 Total liabilities and shareholders equity 100% 3,157, % 3,114,157 Unaudited figures 14_ Consolidated statement of financial position Galenica half year report 2012

15 Consolidated statement of cash flows in thousand CHF Net profit 130, ,593 Income tax 27,463 23,959 Depreciation on property, plant and equipment, investment properties and intangible assets 37,122 35,513 (Gain)/Loss on disposal of property, plant and equipment (116) (60) Increase/(Decrease) in provisions/employee benefit 2,812 (4,349) Net financial result 22,516 27,461 (Gain)/Loss from associates (1,036) (1,269) Other non-cash items 6,755 5,139 Change in receivables (37,179) (49,130) Change in inventories (3,395) (1,286) Change in other liabilities (46,074) (53,356) Change in other net current assets (35,143) (905) Interest received Interest paid (12,346) (15,198) Other financial receipts/(financial payments) 1,338 2,020 Dividends received 5, Income tax paid (21,645) (25,908) Cash flow from operating activities 78,380 65,917 Investments in property, plant and equipment and investment properties (20,539) (22,955) Investments in intangible assets (2,775) (3,323) Investments in associates (218) (2,086) Investments in financial assets and securities (470) (64,177) Proceeds from property, plant and equipment and investment properties Proceeds from intangible assets 94 Proceeds from financial assets and securities ,291 Purchase of subsidiaries (net cash flow) (13,794) (1,942) Cash flow from investing activities (36,869) (73,763) Dividend payment (92,437) (52,279) Purchase of treasury shares (21,757) (36,235) Sale of treasury shares 3,240 3,555 Proceeds from financial liabilities 47,248 11,256 Repayment of financial liabilities (626) (104,587) Purchase of non-controlling interests (620) (817) Cash flow from financing activities (64,952) (179,107) Translation differences (98) (909) Increase/(Decrease) in cash (23,539) (187,862) Cash at 1 January 338, ,881 Cash at 30 June 315, ,019 Unaudited figures Galenica half year report 2012 Consolidated statement of cash flows _15

16 Consolidated statement of changes in equity Fluctuation in value of financial instruments Accumulated translation differences Equity attributable to shareholders of Galenica Ltd. Noncontrolling interests in thousand CHF Share capital Treasury shares Retained earnings Total equity Balance as of 31 December (10,152) (17,383) 1,038,095 (92,114) 919,096 13, ,426 Net profit 105, ,998 16, ,593 Other comprehensive income 5,708 (3,897) 1, ,836 Comprehensive income 5, ,998 (3,897) 107,809 16, ,429 Dividend (51,914) (51,914) (401) (52,315) Transactions on treasury shares (26,343) (6,337) (32,680) (32,680) Share-based payments 5,186 5,186 5,186 Change in non-controlling interests (608) (608) (209) (817) Balance as of 30 June (36,495) (11,675) 1,090,420 (96,011) 946,889 29, ,229 Balance as of 31 December (39,339) (10,238) 1,300,753 (94,918) 1,156,908 45,691 1,202,599 Net profit 119, ,616 11, ,947 Other comprehensive income 9,232 4,543 13,775 13,775 Comprehensive income 9, ,616 4, ,391 11, ,722 Dividend (58,308) (58,308) (34,254) (92,562) Transactions on treasury shares 9,241 (27,758) (18,517) (18,517) Share-based payments 6,822 6,822 6,822 Change in non-controlling interests (272) (272) (348) (620) Balance as of 30 June (30,098) (1,006) 1,340,853 (90,375) 1,220,024 22,420 1,242,444 Unaudited figures _On 3 May 2012, the General Meeting of Galenica Ltd. approved a dividend payment of CHF 58.5 million, corresponding to CHF 9.00 per registered share, for the business year 2011 (previous year: CHF 52.0 million, CHF 8.00 per registered share). The dividends were paid out to the shareholders on 10 May _ Consolidated statement of changes in equity Galenica half year report 2012

17 Notes to the consolidated interim financial statements 1. GALENICA S BUSINESS ACTIVITIES _Galenica is a diversified Group active throughout the healthcare market which, among other activities, develops, manufactures and markets pharmaceutical products, runs pharmacies, provides logistical and database services and sets up networks. _The parent company is Galenica Ltd., a public limited company with its head office in Bern, where it is also registered. The registered offices are at Untermattweg 8, 3027 Bern, Switzerland. Shares in Galenica Ltd. are publicly traded on the SIX Swiss Exchange under securities no (ISIN CH ). Scope of consolidation _The consolidated interim financial statements of Galenica comprise those of Galenica Ltd. and all its subsidiaries, including associates and joint-venture companies. _Subsidiaries and associates newly acquired during the first half of 2012 are included in the consolidated interim financial statements as from the date when control or significant influence respectively were obtained. Companies sold during the year are included up until the date control was lost. Detailed information on the subsidiaries newly acquired during the first half of 2012 is included under the section Business combinations on page ACCOUNTING PRINCIPLES Basis of accounting principles _The present unaudited consolidated interim financial statements of Galenica are based on the consolidated financial statements of the individual companies of Galenica as of 30 June 2012, which have all been prepared under the same principles. Except for the changes in accounting standards detailed below, the consolidated interim financial statements were drawn up using the same accounting principles as the annual financial statements for the year ending 31 December 2011 and comply with International Financial Reporting Standards (IFRS), as well as IAS 34 Interim financial reporting. The consolidated interim financial statements should be read in conjunction with the consolidated financial statements for 2011 as they update previously published information. Details of the consolidation and accounting policies are given in the notes to the consolidated financial statements for _The present consolidated interim financial statements are available in German, French and English. However, the German is the authoritative version. Changes in accounting standards _The accounting standards adopted are consistent with those of the previous financial year with the following exceptions. As of 1 January 2012, Galenica adopted the following amended International Financial Reporting Standards. IFRS 1 Fixed Date in Derecognition Exception IFRS 1 Severe Hyperinflation IFRS 7 Transfer of Financial Assets IAS 12 Recovery of the Carrying Amount Group currency and translation of foreign currencies _The consolidated interim financial statements of Galenica are prepared in Swiss francs (CHF) and, unless otherwise indicated, are rounded up or down to the nearest CHF 1,000. _The principal exchange rates against the Swiss franc which are of importance for the consolidated interim financial statements are as follows: Statement of financial Income statement** position* Exchange rates EUR GBP USD CAD *Period-end exchange rate **Average rates for the half year 3. ESTIMATION UNCERTAINTY AND ASSUMPTIONS _In order to prepare consolidated interim financial statements that comply with generally accepted accounting principles, senior management is obliged to use estimates and assumptions which have an impact on the reported carrying amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the balance sheet date, and the income and expenses reported for the relevant accounting period. Althoungh the estimates and assumptions used were made on the basis of all the available information and with the greatest care, the actual results may differ. Any adjustments resulting from changes in estimates and assumptions are made during the reporting period in which the original estimates and assumptions changed. _These changes have no impact or no material impact on the financial statements of Galenica. Galenica half year report 2012 Notes to the consolidated interim financial statements _17

18 Seasonal influences on operations _Sales in the business sectors in which Galenica operates are not significantly influenced by seasonal or cyclical fluctuations during the year. Income tax _Galenica calculates income tax based on an estimate of the expected income tax rate for the full year. 4. operating SEGMENT information Basis of reporting _The management approach is used to determine the operating segments with reporting obligations. Accordingly, external segment reporting is based on the internal organisational and management structures of Galenica and the internal financial reporting to the Chief Operating Decision Maker (CODM). The CODM of Galenica is the Board of Directors of Galenica Ltd. It defines business activities and monitors internal reporting to assess performance and resource allocation. _For the purposes of company management, Galenica is organised into business sectors according to products and services and has the reportable segments Pharma, Logistics and Retail. The operating segment HealthCare Information does not fulfil the threshold criteria pursuant to IFRS 8 and has therefore been combined with the other activities of the Finance and Corporate Service Division under Other in the operating segment information. _The operating result comprises all operating income generated and expenses incurred in the corresponding segments. The financing of Galenica takes place at Group level, which is why financial income and expenditure and income tax are reported at Group level only and not allocated to segments. All inter-segmental services are charged at arm s length. Unrealised gains or losses may arise from the billing of services and sales of assets between the different segments. Sales of goods and services between the segments and unrealised gains or losses arising therefrom are eliminated in the Eliminations column. _The assets and liabilities include all positions of the statement of financial position that can be directly attributed to a segment or reasonably allocated to a segment. The segments assets and liabilities include loans and current accounts held with respect to other segments. These positions are eliminated in the Eliminations column. 18_ Notes to the consolidated interim financial statements Galenica half year report 2012

19 Operating segment information Products and services in thousand CHF Pharma Logistics Retail Other Eliminations Group Net sales 303,178 1,038, ,260 24,478 (333,376) 1,615,801 Other revenue 155,711 5,104 36,048 13,919 (36,828) 173,954 Revenue with other segments (27,395) (286,746) (34,282) (22,338) 370,761 Total revenue third parties 431, , ,026 16, ,789,755 Depreciation and amortisation (16,979) (7,617) (10,091) (3,194) 759 (37,122) Earnings before interest and taxes (EBIT) 141,295 12,944 26,333 (962) ,890 Interest received 785 Interest paid (18,547) Other financial result (net) (4,754) Income from associates 1,036 1,036 Earnings before taxes (EBT) 158,410 Income tax (27,463) Net profit 130,947 Assets 1,421, , ,213 1,913,548 (1,832,056) 1) 3,157,001 Investments in associates 20, ,310 Liabilities 826, ,598 1,031,428 1,433,483 (1,818,271) 2) 1,914,557 Investments in property, plant and equipment and investment properties 9,132 2,899 8, (72) 20,566 Investments in intangible assets 1, , (613) 3,434 Employees as of 30 June (FTE) 1, , ,013 Geographic areas in thousand CHF Switzerland Europe America Other countries Eliminations Group Net sales 1,748, ,199 76,827 27,913 (402,761) 1,615,801 Other revenue 223,308 96,002 4,320 3,500 (153,176) 173,954 Revenue with other segments (520,526) (33,838) (1,573) 555,937 Total revenue third parties 1,451, ,363 79,574 31,413 1,789,755 Non-current assets 3) 1,422, , , ,775,720 1) Of which elimination of: intercompany positions CHF 1,833,222,000, other unallocated amounts CHF 1,166,000 2) Of which elimination of: intercompany positions CHF 1,833,222,000, other unallocated amounts CHF 14,951,000 3) Without financial assets, deferred tax assets and employee benefit assets Unaudited figures Galenica half year report 2012 Notes to the consolidated interim financial statements _19

20 Operating segment information Products and services in thousand CHF Pharma Logistics Retail Other Eliminations Group Net sales 295,967 1,033, ,435 24,954 (317,717) 1,581,170 Other revenue 119,965 4,897 38,120 13,571 (33,210) 143,343 Revenue with other segments (28,246) (279,463) (23,329) (20,311) 351,349 Total revenue third parties 387, , ,226 18, ,724,513 Depreciation and amortisation (16,007) (7,618) (9,687) (2,775) 574 (35,513) Earnings before interest and taxes (EBIT) 140,324 10,248 24,235 (1,382) (681) 172,744 Interest received 872 Interest paid (21,292) Other financial result (net) (7,041) Income from associates 1,269 1,269 Earnings before taxes (EBT) 146,552 Income tax (23,959) Net profit 122,593 Assets 1) 1,437, , ,615 1,799,793 (1,735,175) 2) 3,114,157 Investments in associates 1) 18,981 5,787 24,768 Liabilities 1) 739, , ,282 1,471,801 (1,723,009) 3) 1,911,558 Investments in property, plant and equipment and investment properties 9,293 5,010 8, (70) 22,947 Investments in intangible assets 1, , (668) 3,727 Employees as of 30 June (FTE) 1, , ,615 Geographic areas in thousand CHF Switzerland Europe America Other countries Eliminations Group Net sales 1,662, ,499 80,225 25,123 (328,127) 1,581,170 Other revenue 257,457 36,089 4,556 3,040 (157,799) 143,343 Revenue with other segments (465,235) (19,928) (763) 485,926 Total revenue third parties 1,454, ,660 84,018 28,163 1,724,513 Non-current assets 1) 4) 1,428, , , ,778,504 1) Values as of 31 December ) Of which elimination of: intercompany positions CHF 1,736,062,000, other unallocated amounts CHF 887,000 3) Of which elimination of: intercompany positions CHF 1,736,062,000, other unallocated amounts CHF 13,053,000 4) Without financial assets, deferred tax assets and employee benefit assets Unaudited figures 20_ Notes to the consolidated interim financial statements Galenica half year report 2012

21 5. BUSINESS COMBINATIONS 6. CONTINGENT LIABILITIES _In the first half of 2012, the scope of consolidation was changed as a result of the following transactions: Retail business sector _Acquisition of pharmacies. GaleniCare Holding and Sun Store acquired pharmacies with different outlets in Switzerland. Upon acquisition, some of these pharmacies, which were mostly unincorporated businesses (asset deals), were merged with GaleniCare Ltd. and Sun Store SA, respectively. _The purchase consideration amounts to CHF 16.9 million, of which CHF 14.7 million was settled by cash payment. The deferred consideration of 2.2 million falls due in 2012 and The purchased goodwill totalling CHF 10.1 million was allocated to the Retail operating segment and corresponds to the added value of the pharmacies based on their locations and customer bases at the time of the takeover. The purchase price allocation has not yet been definitively concluded for acquisitions close to the balance sheet date. in thousand CHF Fair value Cash 988 Trade receivables 3,499 Inventories 1,643 Other current assets 1,248 Property, plant and equipment 978 Intangible assets 10 Deferred tax assets 4 Deferred tax liabilities (166) Other current and non-current liabilities (1,372) Fair value of net assets 6,832 Goodwill 10,113 Purchase consideration 16,945 Deferred purchase consideration (2,163) Cash acquired (988) Net cash flow 13,794 _Galenica has rights and obligations to acquire further pharmacies. These purchase rights or obligations will mature between 2012 and The purchase obligations are expected to involve total payment of a maximum of CHF 7.8 million. The purchase rights amount to an estimated volume of CHF 10.4 million. _There were no changes to ongoing administrative and legal investigations in the first half of Galenica remains confident that the results of these investigations will not have a significant impact on the financial statements. _During the first half of 2012, there was little change in the contingent liabilities in the form of guarantees to customers and liabilities for the acquisition of securities. 7. EVENTS AFTER THE reporting period _Several acquisitions occurred between 30 June 2012 and the date the consolidated interim financial statements were released. Retail business sector _Acquisition of pharmacies. GaleniCare Holding has purchased several pharmacies. The assets and liabilities of these acquisitions will be consolidated as of the date control was obtained. The purchase consideration was CHF 1.6 million, and the fair value of the provisional net assets resulting from these additions was estimated at CHF 0.7 million on the acquisition date. The difference is reflected in the purchased goodwill due to the locations and the existing customer base of these businesses. Since the transactions were concluded shortly before the consolidated interim financial statements were prepared and released, it was not possible to publish the additional information required by IFRS. _There are no further significant events after the reporting period. Proforma figures for acquisitions made in 2012 for the first half of the 2012 financial year _Since they were included in Galenica s scope of consolidation, the businesses acquired have contributed net sales totalling some CHF 6.9 million and an operating profit (EBIT) of CHF 0.5 million to the Group s result as at 30 June Since the majority of companies acquired in the Retail business sector were asset deals, neither the contribution to the result nor the net sales that would have accrued upon completion of the acquisitions on 1 January 2012 can be calculated. 8. RELEASE OF THE group s CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR PUBLICATION _The Board of Directors released the consolidated interim financial statements 2012 for publication on 2 August Galenica half year report 2012 Notes to the consolidated interim financial statements _21